The unlikely cryptocurrency bill that went to Congress

A new cryptocurrency bill is being floated in front of congress this week. The proposed cryptocurrency act of 2020 intends to split cryptocurrencies into three distinctions: Commodity, Security, and Currency.

According to Marshall Hayner, founder and CEO of crypto payments firm Metal Pay, the bill will "fundamentally restructure" cryptocurrencies in the States.

Along with Rep. Paul Gosar, Hayner is cited as one of the founders of the bill and introduced it in congress on Monday. A day after he explained the proposal to all 541 members of the legislature, Hayner took to Twitter and produced a compressive tweetstorm on the subject.

Per Hayner's thread, the bill seeks to split cryptocurrencies up into three separate classifications: crypto-commodities, crypto-securities, and crypto-currencies.

The first, crypto-commodities, are defined as tradeable, fungible digital assets that exist on the blockchain. These can also represent contracts, utilities, or commodities in the physical world. These would likely include Bitcoin, Ethereum, and other such tokens.

The second, crypto-securities, represent a "security-like instrument." According to Hayner, these too exist on a blockchain but often derive their value from external assets. These may pertain to real-world tokenization on the blockchain. 

As reported by Decrypt, fast-food chain Fatburger recently issued securities on the Ethereum blockchain. It's likely that such assets would fall under this category.

The third and final classification is cryptocurrency, but as Hayner describes them, it seems to refer to stablecoins—cryptocurrencies pegged to fiat currencies. These include Tether, USDC, and the Paxos Standard.

The bill cites them as "basic tools of a digital, global economy," built to resist counterfeiting, money-laundering, and manipulation. 

Further, the bill proposes that the Commodity Futures Trading Commission (CFTC), the Financial Crimes Enforcement Network (FinCEN), and the Securities and Exchange Commission (SEC) provide appropriate oversight for each classification.

The bill has "zero chance" of passing

While the proposed act intends to bring some clarity and order to the cryptocurrency regulation, it's already been the victim of considerable community backlash.

Jerry Brito, executive director of Coin Center, argued that since the bill concerns multiple regulatory jurisdictions, it would need assent from two committees—which would be almost impossible. This, in Brito's view, is made even more challenging by the fact that the bill's co-founder, Rep. Paul Gosar, is not a member of either of the considering committees.

Further, Alex Gladstein, CSO for both the Human Rights Foundation and the Oslo Freedom Forum, raised an issue with the act.

Per the bill, any individual transacting cryptocurrencies with a business will have their information shared with the relevant regulatory agencies. He argued this would be an infringement on everyone’s financial privacy. Not that blockchains have much privacy anyway.